Stock-Based Compensation Plans

12 Months Ended

Aug. 29, 2021

Share-based Payment Arrangement [Abstract]

Note 8—Stock-Based Compensation

The Company grants stock-based compensation, primarily to employees and non-employee directors. Grants to all executive officers are generally performance-based. Through a series of shareholder approvals, there have been amended and restated plans and new provisions implemented by the Company. RSUs are subject to quarterly vesting upon retirement or voluntary termination. Employees who attain at least 25 years of service with the Company receive shares under accelerated vesting provisions on the annual vesting date. The 2019 Incentive Plan authorized the issuance of 17,500,000 shares (10,000,000 RSUs) of common stock for future grants, plus the remaining shares that were available for grant and the future forfeited shares from grants under the previous plan, up to a maximum aggregate of 27,800,000 shares (15,885,000 RSUs). The Company issues new shares of common stock upon vesting of RSUs. Shares for vested RSUs are generally delivered to participants annually, net of shares withheld for taxes.

In conjunction with a special cash dividend paid in the second quarter of 2021, and in accordance with the plans, the number of shares subject to outstanding RSUs was increased on the dividend record date to preserve their value. They were adjusted by multiplying the number of outstanding shares by a factor of 1.019 (rounded up to a whole share), representing the ratio of the Nasdaq closing price of $391.77 on November 30, 2020, which was the last trading day immediately prior to the ex-dividend date, to the Nasdaq opening price of $384.50 on the ex-dividend date, December 1, 2020. The outstanding RSUs increased by approximately 94,000. The adjustment did not result in additional stock-based compensation expense, as the fair value of the awards did not change. As further required by the plans, the maximum number of shares issuable was proportionally adjusted, which resulted in an additional 220,000 RSU shares available to be granted.

Summary of Restricted Stock Unit Activity

RSUs granted to employees and to non-employee directors generally vest over five and three years, respectively. Additionally, the terms of the RSUs, including performance-based awards, provide for accelerated vesting for employees and non-employee directors who have attained 25 or more and five or more years of service with the Company, respectively. Recipients are not entitled to vote or receive dividends on unvested and undelivered shares. At the end of 2021, 12,001,000 shares were available to be granted as RSUs under the 2019 Incentive Plan.

The following awards were outstanding at the end of 2021:

•4,218,000 time-based RSUs, which vest upon continued employment or service over specified periods of time; and

•131,000 performance-based RSUs, of which 104,000 were granted to executive officers subject to the determination of the attainment of performance targets for 2021. This determination occurred in September 2021, at which time at least 33% of the units vested, as a result of the long service of all executive officers. The remaining awards vest upon continued employment over specified periods of time.

The following table summarizes RSU transactions during 2021:


	Number of Units (in 000’s)	Weighted-Average Grant Date Fair Value
Outstanding at the end of 2020	5,174	$	207.55
Granted	1,982	369.15
Vested and delivered	(2,764)	235.64
Forfeited	(137)	253.53
Special cash dividend	94	N/A
Outstanding at the end of 2021	4,349	$	257.88

The weighted-average grant date fair value of RSUs granted was $369.15, $294.08, and $224.00 in 2021, 2020, and 2019, respectively. The remaining unrecognized compensation cost related to non-vested RSUs at the end of 2021 was $728 and the weighted-average period of time over which this cost will be recognized is 1.6 years. Included in the outstanding balance at the end of 2021 were approximately 1,516,000 RSUs vested but not yet delivered.

Summary of Stock-Based Compensation

The following table summarizes stock-based compensation expense and the related tax benefits:


	2021		2020		2019
Stock-based compensation expense	$	665	$	619	$	595
Less recognized income tax benefit	140		128		128
Stock-based compensation expense, net	$	525	$	491	$	467